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RE PRINC TERMS
RE Princ Unit Terms
413
Real Estate & Planning
Professional
06/23/2017

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Term
appreciation
Definition
The increase in market value of real estate.
Term
C.A.R.
Definition
A California trade association representing REALTORS® statewide.
Term
capitalism
Definition
An economic system in which most of the economy’s resources are privately owned.
Term
demographics
Definition
Information from a variety of sources used to create a broad profile of any community.
Term
gold rush
Definition
A large migration of people to a newly discovered gold field.
Term
housing inventory
Definition
Housing units that are available for sale or in the process of being made ready for sale.
Term
inflation
Definition
The increase in the general price level of goods and services.
Term
median home price
Definition
The price that is middle value of a sample of sales, with one-half of the sales below and one-half of the sales above.
Term
net worth
Definition
The value of all assets minus all liabilities.
Term
unemployment rate
Definition
The percentage of the people classified as unemployed as compared to the total labor force.
Term
acknowledgment
Definition
A formal declaration to a public official (notary) by a person who has signed an instrument that states that the signing was voluntary.
Term
appurtenance
Definition
Those rights and improvements that belong to and pass with the transfer of real property but are not necessarily a part of the actual property.
Term
bundle of rights
Definition
An ownership concept describing all the legal rights that attach to the ownership of real property.
Term
chattel
Definition
Personal property.
Term
constructive notice
Definition
Notice given by recording a document or taking possession of the property.
Term
easement
Definition
Interest owned by one person in the land of another person.
Term
emblements
Definition
Annual crops produced for sale by tenant farmers
Term
estate
Definition
A legal interest in land; defines the nature, degree, extent, and duration of a person’s ownership in land.
Term
estate in fee
Definition
1.The most complete form of ownership of property. 2.Freehold estate that's passed by descent or by will after an owner’s death. 3.Also known as estate of inheritance or fee simple estate.
Term
fee simple absolute
Definition
1.The largest, most complete ownership recognized by law. 2.An estate in fee with no restrictions on its use. 3.Property transferred or sold with no conditions or limits on its use.
Term
fee simple qualified
Definition
1.An estate in which the holder has a fee simple title, subject to return to the grantor if a specified condition occurs. 2.Also known as fee simple defeasible.
Term
fixture
Definition
Personal property that has become affixed to real estate.
Term
freehold estate
Definition
An estate in real property which continues for an indefinite period of time.
Term
less-than-freehold estate
Definition
A leasehold estate; considered to exist for a definite period of time or successive periods of time until termination.
Term
life estate
Definition
An estate that is limited in duration to the life of its owner or the life of some other chosen person.
Term
littoral
Definition
Land bordering a lake, ocean, or sea.
Term
patents
Definition
The legal document that transmits real property from the state or federal government to a person.
Term
personal property
Definition
Anything movable that is not real property.
Term
prescription
Definition
The process of acquiring an interest, not ownership, in a certain property.
Term
quiet enjoyment
Definition
The right to peace without aggravation by others.
Term
real property
Definition
Land, anything affixed to the land, anything appurtenant to the land, anything immovable by law.
Term
riparian rights
Definition
The rights of a landowner whose land is next to a natural watercourse to reasonable use of whatever water flows past the property.
Term
severalty
Definition
Ownership of real property by one person or entity.
Term
title
Definition
Evidence of land ownership.
Term
trade fixture
Definition
Personal property that has become affixed to real estate.
Term
abandonment
Definition
The obvious and intentional surrender of the easement.
Term
accession
Definition
Process by which there is an addition or reduction to property by the efforts natural forces.
Term
accretion
Definition
Gradual buildup of alluvium by natural causes on property bordering a river, lake, or ocean.
Term
alienate
Definition
The act of transferring ownership, title, or interest.
Term
avulsion
Definition
The sudden washing or tearing of land by the action of water.
Term
bequest
Definition
A gift of personal property by will.
Term
codicil
Definition
A change in a will before the maker’s death.
Term
easement in gross
Definition
An easement that is not appurtenant to any one parcel.
Term
encroachment
Definition
The unauthorized placement of permanent improvements that intrude on adjacent property owned by another.
Term
executor
Definition
A person named in a will to handle the affairs of the deceased.
Term
grantee
Definition
The person receiving the property, or to whom it is being conveyed.
Term
grantor
Definition
The person conveying or transferring the property.
Term
homestead
Definition
Status provided to a homeowner’s principal residence that protects the home against judgments up to specified amounts.
Term
instrument
Definition
A document in real estate.
Term
intestate
Definition
Dying without leaving a will.
Term
license
Definition
Permission to use a property which may be revoked at any time.
Term
lis pendens
Definition
Notice that indicates pending litigation affecting title on a property
Term
quiet title action
Definition
It is a court proceeding to clear a cloud on the title of real property.
Term
reliction
Definition
Occurs when land that has been covered by water is exposed by receding of the water.
Term
succession
Definition
The legal transfer of a person’s interest in real and personal property under the laws of descent.
Term
abrogation
Definition
(1)The rescission or annulling of a contract. (2) The revocation or repealing of a contract by mutual consent of parties to the contract.
Term
addendum
Definition
Additional documents attached to and made part of a contract.
Term
assignee
Definition
Party to whom a lease is assigned or transferred.
Term
assignor
Definition
The person transferring a claim, benefit, or right in property to another.
Term
consideration
Definition
Something of value—such as money, a promise, property, or personal services.
Term
counteroffer
Definition
The rejection of an original offer that becomes a new offer.
Term
executory contract
Definition
A contract in which obligation to perform exists on one or both sides.
Term
express contract
Definition
Parties declare the terms and put their intentions in oral or written words.
Term
forbearance
Definition
(1) Refraining from action by a creditor against a debt or after the debt has become due. (2) Forgiving a debt or obligation.
Term
novation
Definition
The substitution by agreement of a new obligation for an existing one.
Term
offer
Definition
A presentation or proposal for acceptance to form a contract.
Term
offeree
Definition
The party receiving an offer.
Term
offeror
Definition
The party making an offer.
Term
rescission
Definition
Legal action taken to repeal a contract either by mutual consent of theparties or by one party when the other party has breached a contract.
Term
revocation
Definition
The canceling of an offer to contract by the person making the original offer.
Term
specific performance
Definition
A court action brought to compel a party to carry out the terms of a contract.
Term
statute of frauds
Definition
The law that requires contracts to be in writing.
Term
statute of limitations
Definition
The period of time limited by statute within which certain court actions must be brought by one party against another.
Term
tender
Definition
An offer by one of the parties to carry out his or her part of the contract.
Term
waiver
Definition
The relinquishment or refusal to accept a right.
Term
agency relationship
Definition
A special relationship of trust by which one person (agent) is authorized to conduct business, sign papers, or otherwise act on behalf of another person (principal). This relationship may be created by expressed agreement, ratification, or estoppel.
Term
agent
Definition
A person who acts for and in the place of another, called a principal, for the purpose of affecting the principal’s legal relationship with third persons.
Term
associate licensee
Definition
Another term used for a licensed real estate salesperson employed by a licensed real estate broker.
Term
attorney-in-fact
Definition
1.The person holding the power of attorney. 2.A competent & disinterested person who is authorized by another person to act in his or her place in legal matters.
Term
commingling
Definition
Depositing client funds in the broker’s personal account or general business account.
Term
conversion
Definition
The appropriation of property belonging to another as in a broker using a client’s funds.
Term
customer
Definition
A prospective buyer of real estate; not to be confused with a property seller, who is the listing broker’s client.
Term
dual agent
Definition
A broker who represents both parties in a transaction.
Term
fiduciary relationship
Definition
A relationship that implies a position of trust or confidence.
Term
general agent
Definition
A person authorized by a principal to perform any and all tasks associated with the continued operation of a particular project.
Term
listing agreement
Definition
A written contract by which a principal, or seller, employs a broker to sell real estate.
Term
misrepresentation
Definition
1.Making a false statement or concealing a material fact. 2.A false statement of fact.
Term
net listing
Definition
An employment contract in which the commission is not definite.
Term
principal
Definition
In a real estate transaction, the one (seller) who hires the broker to represent him or her in the sale of the property.
Term
procuring cause
Definition
The broker who produces a buyer ready, willing, and able to purchase the property for the price and on the terms specified by the seller, regardless of whether the sale is completed.
Term
puffing
Definition
Exaggerated comments or opinions not made as representations of fact, thus not grounds for misrepresentation.
Term
ratification
Definition
The approval of a previously authorized act, performed on behalf of a person, which makes the act valid and legally binding.
Term
ready, willing, and able
Definition
A buyer who is prepared to enter a purchase contract, who really wants to buy, and who meets the financing requirements of purchase.
Term
real estate salesperson
Definition
A person with a real estate license and employed by a real estate broker-agent of the broker-not the seller or buyer.
Term
RLA – exclusive form
Definition
The new C.A.R. name for the Exclusive Authorization and Right to Sell Listing Agreement.
Term
safety clause
Definition
Clause that protects the listing broker’s commission, if the owner personally sells the property to someone who was shown the property or made an offer during the term of the listing.
Term
single agency
Definition
When a broker represents only the buyer or only the seller in the transaction.
Term
special agent
Definition
A person employed to perform a specific task.
Term
subagent
Definition
A broker delegated by the listing agent (if authorized by the seller) who represents the seller in finding a buyer for the listed property.
Term
third party
Definition
A person who would be considered the customer in an agency relationship.
Term
assignee
Definition
Party to whom a lease is assigned or transferred.
Term
assignment
Definition
The transfer of the entire leasehold estate to a new person.
Term
counteroffer
Definition
The rejection of an original purchase offer and the submission of a new and different offer.
Term
CPI
Definition
An index used for rent adjustments on commercial leases.
Term
deposit receipt
Definition
Contract that acts as the receipt for earnest money given by the buyer to secure an offer, as well as being the basic agreement, between the buyer and seller.
Term
gross lease
Definition
A type of commercial lease where the landlord pays for the building's property taxes, insurance and maintenance. A gross lease can be modified to meet the needs of a particular building's tenants. It may require the tenant to pay the utility bills
Term
ground lease
Definition
A lease for only the land.
Term
implied warranty of habitability
Definition
The property will be maintained to meet bare living requirements
Term
interim occupancy agreement
Definition
An agreement used if a buyer takes possession of a property prior to close of escrow.
Term
lease
Definition
A contract between an owner and tenant.
Term
leased fee estate
Definition
The interest of the lessor.
Term
lessee
Definition
(1) Tenant. (2) The one to whom property is rented or leased.
Term
lessor
Definition
The person who owns the property and signs the lease to give possession and use to the tenant.
Term
liquidated damages clause
Definition
Clause in a contract that allows parties to the contract to decide in advance the amount of damages to be paid, should either party breach the contract.
Term
net lease
Definition
The tenant pays an agreed-upon sum as rent, plus certain agreed-upon expenses per month (i.e., taxes, insurance, and repairs).
Term
option
Definition
A contract to keep open, for a set period of time, an offer to purchase real property.
Term
percentage lease
Definition
The tenant pays a percentage of gross monthly receipts in addition to a base rent.
Term
proprietary lease
Definition
A lease used on co-op apartment buildings
Term
rent
Definition
Payment for the use of a property.
Term
residential lease
Definition
A lease is used for single-family homes and duplexes.
Term
retaliatory eviction
Definition
An eviction that occurs in revenge for some complaint made by the tenant.
Term
security deposit
Definition
Money given to a landlord to prepay for any damage that might occur to a property during a lease term that is more than just normal wear and tear.
Term
sublease
Definition
Transfers less than the entire leasehold, with the original lessee being primarily liable for the rental agreement
Term
time is of the essence clause
Definition
A clause in a contract that emphasizes punctual performance as a requirement of the contract.
Term
unlawful detainer action
Definition
The legal remedy to remove a tenant.
Term
100-year flood
Definition
Boundary indicating areas of special flood zone areas.
Term
as is
Definition
Term stating the seller is not responsible for repairing any defect.
Term
asbestos
Definition
Mineral fiber used in construction materials that causes cancer.
Term
caveat emptor
Definition
Let the buyer beware
Term
earthquake fault zone
Definition
An area delineated by state officials to have an active fault with the potential for surface rupture
Term
Easton v Strassburger
Definition
The California Court of Appeals addressed, whether a broker is negligent if he fails to disclose defects which he should have discovered through visual inspection or reasonable diligence.
Term
FIRPTA
Definition
Tax withholding requirement if the seller is a foreign person.
Term
formaldehyde
Definition
Chemical organic, carcinogenesis compound found in building materials.
Term
hazardous household waste
Definition
Consumer products such as paints, cleaners, stains, varnishes, car batteries, motor oil, and pesticides that contain hazardous components.
Term
hazardous waste
Definition
Materials whose disposal is regulated by the EPA.
Term
Mello-Roos District
Definition
Special tax is imposed on real property owners within a Community Facilities District.
Term
mold
Definition
Fungus that reproduces by means of spores.
Term
public report
Definition
A document disclosing all important facts about a subdivision such as marketing & financing as well as any negative aspects to a potential buyer (e.g., natural or environmental hazards, unusual costs, restrictions, easements, or financing arrangements).
Term
radon
Definition
Colorless, odorless, carcinogenesis gas that is detectable by a spectrometer.
Term
red flag
Definition
Something that alerts a reasonably observant person of a problem.
Term
stigmatized property
Definition
1. Property buyers or tenants may avoid for reasons unrelated to physical conditions or features. The most common are those in which there have been murders, suicides, or criminal activity. (2) Also known as psychologically impacted property.
Term
Subdivided Lands Law
Definition
State law that protects buyers when buying homes in new subdivisions.
Term
target housing
Definition
Housing not exempt from the lead based paint disclosure.
Term
Transfer Disclosure Statement (TDS)
Definition
Detailed statement from the seller describing the condition of the property.
Term
abstract of title
Definition
Written summary of all useful documents discovered in a title search.
Term
ad valorem
Definition
A Latin phrase meaning according to value.
Term
assessment roll
Definition
A list of all taxable property showing the assessed value of each parcel;establishes the tax base.
Term
beneficiary statement
Definition
A statement of the unpaid condition of a loan and describes the condition of the debt.
Term
calendar year
Definition
Begins on January 1 and continues through December 31 of the same year.
Term
completed escrow
Definition
All terms of the escrow instructions have been met.
Term
escrow
Definition
A small and short-lived trust arrangement.
Term
escrow holder
Definition
Acts as a neutral agent of both buyer and seller.
Term
fiscal year
Definition
Starts on July 1 and runs through June 30 of the following year; used for real property tax purposes.
Term
impound account
Definition
A trust account set up for funds set aside for future costs relating to a property.
Term
marketable title
Definition
Good or clear saleable title reasonably free from risk of litigation over possible defects.
Term
metes and bounds
Definition
Land description that delineates boundaries and measures distances between landmarks to identify property.
Term
plat map
Definition
Map of a subdivision indicating the location and boundaries of individual lots.
Term
preliminary report
Definition
An offer to issue a policy of title insurance in the future for a specific fee.
Term
property taxes
Definition
Taxes used to operate the government in general.
Term
proration
Definition
The division and distribution of expenses and/or income between the buyer and seller of property as of the date of closing or settlement.
Term
section
Definition
An area of land, one square mile, or 640 acres; 1/36 of a township.
Term
special assessments
Definition
Taxes used for specific local purposes
Term
title insurance policy
Definition
An insurance policy that protects the insured against loss or damage due to defects in the property’s title.
Term
vesting
Definition
The way title will be taken.
Term
acceleration clause mortgage
Definition
A clause in a loan document describing certain events that would cause the entire loan to be due.
Term
adjustable-rate
Definition
A note whose interest rate is tied to a movable economic index.
Term
adjustable-rate mortgage (ARM)
Definition
Is one whose interest rate is tied to a movable economic index.
Term
alienation clause
Definition
A clause in a loan document that would allow the lender to call the entire loan due upon the sale of the property.
Term
all-inclusive trust deed (AITD)
Definition
A purchase money deed of trust subordinate to but still including the original loan.
Term
amortization
Definition
The liquidation of a financial obligation.
Term
assumption clause
Definition
A clause in a document that allows a buyer to take over the existing loan and agree to be liable for the repayment of the loan.
Term
beneficiary
Definition
The lender under a deed of trust.
Term
blanket loan
Definition
A loan secured by several properties. The security instrument used can be a blanket deed of trust or a blanket mortgage.
Term
CAL-VET Program
Definition
A program administered by the State Department of Veterans Affairs for the direct financing of farm and home purchases by eligible California veterans of the armed forces.
Term
certificate of eligibility
Definition
Issued by Department of Veterans Affairs; evidence of individual’s eligibility to obtain VA loan.
Term
certificate of reasonable value (CRV)
Definition
The Federal VA appraisal commitment of property value.
Term
collateral
Definition
Something of value given as security for a debt.
Term
conforming loans
Definition
Have terms and conditions that follow the guidelines set forth by Fannie Mae and Freddie Mac. These loans are called “A” paper loans, or prime loans, and can be made to purchase or refinance homes (one-to-four residential units).
Term
construction loan
Definition
An interim loan made to finance the actual construction or improvement on land. Funds are usually disbursed in increments as the construction progresses.
Term
contract of sale
Definition
For the sale of property where the seller gives up possession but retains title until the total purchase price is paid. Also called installment sales contract, a contract of sale, an agreement of sale, a conditional sale contract, or a land sales contract
Term
conventional loan
Definition
Any loan made by lenders without any governmental guarantees.
Term
deed of trust
Definition
Is a three party security instrument guaranteeing loan repayment and conveying naked legal title to land from a trustor (borrower) to a trustee (titleholder) to be held as security for the beneficiary (lender) for payment of a debt in case of default on the loan.(Also called trust deed).
Term
deficiency judgment
Definition
A judgment against a borrower for the balance of a debt owed when the security or the loan is not sufficient enough to pay the debt.
Term
discounting a note
Definition
Selling a note for less than the face amount or the current balance.
Term
endorsement
Definition
Signature.
Term
equitable title
Definition
The interest held by the trustor under a trust deed and gives the borrower the equitable right to obtain absolute ownership to the property when the terms of the trust deed are met.
Term
equity
Definition
The difference between the appraised value and the loan.
Term
fictitious trust deed
Definition
Recorded trust deed containing details that apply to later loan documents.
Term
first trust deed
Definition
The trust deed recorded first against a property with first priority over all other claims and is superior to any other.
Term
fully amortized fixed-rate note
Definition
Describes a loan with an interest rate that is fixed and payments that are level for the life of the loan. It is characterized by regular, periodic payments of fixed amounts, to include both interest and principal, which pay off the debt completely by the end of the term.
Term
hard money loan
Definition
Any loan made on real property in exchange for cash. The borrower gets the entire loan balance at one time. It is a fixed-rate second mortgage with principal and interest payments remaining the same over the life of the loan.
Term
home equity line of credit (HELOC)
Definition
The borrower takes money as it is needed-up to the credit limit. It has a low starting interest rate, with a variable monthly rate based on outstanding balance.
Term
home equity loan
Definition
The borrower gets the entire loan balance at one time. It is a fixed-rate second mortgage with principal and interest payments remaining the same over the life of the loan.
Term
hypothecation
Definition
A process which allows a borrower to remain in possession of the property while using it to secure a loan.
Term
installment note
Definition
A note which provides for a series of periodic payments of principal and interest, until amount borrowed is paid in full. This periodic reduction of principal amortizes the loan.
Term
interest
Definition
The charge for the use of money.
Term
interest only loan
Definition
A straight loan or term loan, non-amortizing loan in which the interest rate is generally higher and the lender receives only interest during the term of the loan and principal is repaid in a lump sum at maturity.
Term
judicial foreclosure
Definition
Foreclosure by court action.
Term
junior loan
Definition
Secondary financing for a loan that has subordinate or inferior priority to another loan.
Term
mortgagee
Definition
The lender under a mortgage.
Term
mortgagor
Definition
The borrower under a mortgage.
Term
naked legal title
Definition
Title lacking the rights and privileges commonly associated with ownership may be held by trustee under a trust deed.
Term
negative amortization
Definition
A portion of the interest is not paid each month. The difference between what should be paid and what is actually paid is added to the unpaid principal balance of the loan and the principal increases instead of decreases.
Term
negotiable instrument
Definition
Is a written unconditional promise or order to pay a certain amount of money at a definite time or on demand.
Term
nominal or named rate
Definition
The interest rate stated in the note.
Term
nontraditional mortgage product
Definition
Is any loan other than a fixed-rate, 30-year, fully amortized loan.
Term
notice of default
Definition
A notice to a defaulting party that there has been a non-payment of a debt.
Term
open-end loan
Definition
Is essentially a revolving line of credit.
Term
package loan
Definition
A loan on real property secured by more than the land and structure. It includes fixtures attached to the building (appliances, carpeting, drapes, air conditioning) and other personal property.
Term
partial amortization
Definition
A large (balloon) payment will be due at the end of the loan term.
Term
partial reconveyance
Definition
A clause in a trust deed or mortgage permitting the release of a parcel or part of a parcel from the lien of that security instrument. The release usually occurs upon the payment of a specified sum of money.
Term
partially amortized note
Definition
A promissory note with a repayment schedule that is not sufficient to amortize the loan over its term.
Term
promissory note
Definition
The evidence of the debt.
Term
purchase-money loan
Definition
Purchase money makes up part of the purchase price. Any loan made at the time of a sale, as part of that sale.
Term
qualifying rate
Definition
The initial interest rate determined by the current rate of the chosen index.
Term
renegotiable rate mortgage
Definition
Loan in which the interest rate is renegotiated periodically.
Term
security instrument
Definition
A legal document given by the borrower to hypothecate the property to the lender as collateral for a loan, creating a security interest.
Term
seller financing disclosure statement
Definition
It gives both the seller and buyer all the information needed to make an informed decision about using seller financing to complete the sale.
Term
standby commitment
Definition
A letter that promises to deliver a takeout loan in the future.
Term
subordination clause
Definition
A clause in which the holder of a trust deed permits a subsequent loan to take priority. Is used to change the priority of a financial instrument.
Term
swing loan
Definition
(1) A short-term loan used to enable the purchaser of a new property to buy that property on the strength of the equity from the property the purchaser is now selling. (2) Also known as a bridge loan.
Term
takeout loan
Definition
The permanent loan that pays off a construction loan.
Term
trust deed
Definition
Is a three party security instrument guaranteeing loan repayment and conveying naked legal title to land from a trustor (borrower) to a trustee (titleholder) to be held as security for the beneficiary (lender) for payment of a debt in case of default on the loan.(Also called deed of trust).
Term
VA loan
Definition
A loan made to qualified veterans for the purchase of real property wherein the Department of Veterans Affairs guarantees the lender payment of the mortgage.
Term
vendee
Definition
The buyer under a contract of sale (land contract).
Term
vendor
Definition
The seller under a contract of sale (land contract).
Term
wraparound mortgage
Definition
Sometimes called "AITD", where a new loan is placed in a secondary position; the new loan includes the unpaid balance of 1st loan & the sums loaned by the lender of the 2nd loan.
Term
annual percentage rate (APR)
Definition
The relative cost of credit expressed as a yearly percentage rate. It is the relationship of the total amount financed, expressedas percentage.
Term
commercial bank
Definition
An all purpose institutional lender that commonly makes short-term, or interim loans to finance construction.
Term
compensating balance
Definition
A minimum credit balance that a bank requires a borrower to keep on deposit as a condition for granting a loan.
Term
credit scoring
Definition
A statistical method lenders use to assess a borrower’s credit risk.
Term
credit union
Definition
Lender whose members usually have the same type of occupation.
Term
deregulation
Definition
A process whereby regulatory restraints are gradually relaxed.
Term
disintermediation
Definition
The process of depositors removing funds from savings.
Term
Equal Credit Opportunity Act Federal
Definition
An act ensuring that all consumer have an equal chance to obtain credit.
Term
FDIC
Definition
Corporation that insures deposits in all federally chartered banks and savings institutions up to $250,000 per depositor.
Term
finance charge
Definition
The dollar amount the credit will cost the borrower.
Term
Loan Estimate
Definition
Document that lists the charges the buyer is likely to pay at settlement.
Term
loan-to-value
Definition
The percentage of appraised value to the loan.
Term
monetary policy
Definition
Actions taken by the Fed to influence the availability and cost money and credit as a means of promoting national economic goals.
Term
mortgage broker
Definition
Real estate licensee who is a third party originator.
Term
mortgage companies
Definition
Lender whose principal business is the origination, closing, funding, selling, and servicing of loans secured by real property.
Term
Mortgage Loan Disclosure Statement California
Definition
Required statement that disclosed expected maximum costs and expenses of making the loan that are to be paid by the borrower.
Term
mortgage yield
Definition
The total interest, fees, and points earned by the lender expressed as a percentage.
Term
mortgage-backed securities
Definition
Pools of mortgages used as collateral for the issuance of securities in the secondary market.
Term
pass-through securities
Definition
Mortgage backed securities that pass through the principal and interest of the underlying loans to investors.
Term
primary mortgage market
Definition
Market in which lenders make mortgage loans directly to borrowers.
Term
real estate investment trust
Definition
A company with a minimum of 100 shareholders that owns operates income-producing real estate or engages in financing real estate.
Term
redlining
Definition
A discriminatory lending practice prohibited by the Holden Act.
Term
secondary mortgage market
Definition
A resale marketplace for mortgage loans.
Term
tight money
Definition
An economic situation in which the supply of money is limited, and the demand for money is high, as evidenced by high interest rates.
Term
Truth in Lending Act
Definition
Consumer-protection law passed to promote the informed use of consumer credit by requiring disclosures about its terms and costs.
Term
underwriting
Definition
The process of evaluating a borrower’s risk factors before the lender will make a loan.
Term
warehousing
Definition
Revolving line of credit extended to a mortgage company from a warehouse lender.
Term
actual age
Definition
Features that add value to a property.
Term
amenities
Definition
An act or process of developing an opinion of value.
Term
appraisal
Definition
An orderly systematic method to arrive at an estimate of value.
Term
appraisal process
Definition
A written statement where an appraiser gives his or her opinion of the property value, as of the date of appraisal.
Term
appraisal report
Definition
The process of putting several smaller less valuable lots together under one ownership.
Term
assemblage
Definition
The process that can be employed to convert income to value.
Term
capitalization
Definition
When land uses are compatible and homes are similar in design and size, the maximum value is realized.
Term
conformity
Definition
The rent established by agreement or contract.
Term
contract rent
Definition
Commercial properties benefit from more exposure on a corner lot.
Term
corner influence
Definition
The expenses in money, labor, material, or sacrifices in acquiring or producing something.
Term
cost
Definition
A lot found on a dead-end street with same way for ingress and egress.
Term
cul-de-sac lot
Definition
Loss in value from any cause.
Term
depreciation
Definition
The estimated period over which a building may be profitably used.
Term
economic life
Definition
What a leased property would be expected to rent for under current market conditions if the property were vacant and available for rent.
Term
economic rent
Definition
Age of a building determined by its condition and usefulness.
Term
effective age
Definition
Desire coupled with purchasing power.
Term
effective demand
Definition
The price the property would bring if freely offered on the open market with both a willing buyer and a willing seller.
Term
fair market value
Definition
A lot that looks like a flag on a pole, which represents the access to the site; usually located to the rear of another lot fronting a main street.
Term
flag lot
Definition
The width of a property on the side facing the street.
Term
front foot
Definition
The ability of a property to be useful and perform the function for which it is intended according to current market tastes and standards.
Term
functional utility
Definition
Any buildings or structures on a lot.
Term
improvements
Definition
Short-term and temporary use of a property until it is ready for a more productive highest and best use.
Term
interim use
Definition
Lot that is the least desirable due to the lack of privacy because it is surrounded by the back yards of other lots.
Term
key lot
Definition
This may be the most important factor influencing value.
Term
location
Definition
What a property actually sold for.
Term
market price
Definition
The rent a property should bring in the open market.
Term
market rent
Definition
Sometimes called the objective value.
Term
market value
Definition
The placement of a building on its lot in relation to exposure to sun, prevailing wind, traffic, and privacy from the street.
Term
orientation
Definition
The increase in the value when several smaller parcels are combined together into one larger parcel.
Term
plottage increment
Definition
Anything that may be owned and gained lawfully.
Term
property
Definition
The final step in an appraisal is to examine the values derived by the various approaches.
Term
reconciliation
Definition
The cost of replacing improvements with modern materials and techniques.
Term
replacement cost
Definition
The availability or lack of availability of a commodity in the marketplace.
Term
scarcity
Definition
A lot that is fronted head-on by a street; noise and glare from headlights may be detractors from this type of lot.
Term
T-lot
Definition
Title to property must be marketable with an unclouded title.
Term
Transferability
Definition
The ability of a property to satisfy a need or desire, such as shelter, income, or amenities.
Term
utility
Definition
The usefulness of the property to its owner. This is subjective value orthe value given for personal reasons.
Term
utility value
Definition
Loss of income because of a vacant unit is known.
Term
vacancy factor
Definition
Is the number of vacant units expressed as a percentage.
Term
vacancy rate
Definition
The power of goods or services to command other goods in exchange for the present worth of future brnefits arising from property ownership.
Term
value
Definition
Soil that is used to fill in holes or support a foundation-bearing wall.
Term
bearing wall
Definition
A wall that supports a vertical load as well as its own weight.
Term
board foot
Definition
Measurement of lumber equal to the volume of a board 12"x12"x1" (144 cubic inches).
Term
BTU
Definition
Measurement that calculates heat; the amount of heat needed to raise one pound of water one degree Fahrenheit.
Term
CID
Definition
Common-interest development combining the individual ownership of private dwellings with the shared ownership of common facilities of the entire project.
Term
condemnation
Definition
The proceeding to exercise the power of eminent domain.
Term
conduit
Definition
Flexible pipe in which electrical wiring is installed.
Term
deciduous
Definition
Plants and trees that lose their leaves seasonally in the fall.
Term
drywall
Definition
Gypsum panels used in place of wet plaster to finish the inside of buildings.
Term
EER
Definition
Measurement of the efficiency of energy; used to determine the effectiveness of appliances.
Term
EIR
Definition
Study of how development will affect the ecology of its surroundings.
Term
eminent domain
Definition
The right of the government to take private property from an owner, for public use, paying fair market value.
Term
final tract map
Definition
A map indicating any changes required by the planning commission and is recorded in the county where the property is located.
Term
General Plan
Definition
The long term physical development of a community that covers 7 major categories: land use, circulation, housing, conservation, open space, noise, & safety. Areas on the coast must address protection of natural resources and wetlands.
Term
linear foot
Definition
A measurement of length, rather than area (square foot) or volume (cubic foot).
Term
parcel map
Definition
Map showing a parcel of land that will be subdivided into less than five parcels or units and shows land boundaries, streets, and parcel number.
Term
party wall
Definition
Wall erected on the line between two adjoining properties, which are under different ownership, for the use of both parties.
Term
percolating water
Definition
Underground water not flowing in a defined channel.
Term
percolation test
Definition
Test used to determine the ability of the land to absorb and drain water and is frequently used when installing septic systems.
Term
planned development
Definition
(1) A planning and zoning term describing land not subject to conventional zoning to permit clustering of residences or other characteristics of the project which differ from normal zoning. (2) Sometimes called a planned unit development (PUD).
Term
police power
Definition
The power of the state to enact laws within constitutional limits to promote the order, safety, health, morals and general welfare of our society.
Term
potable
Definition
Fresh water that is safe and agreeable for drinking.
Term
R-value
Definition
Rating that measures how well insulation resists heat.
Term
schematics
Definition
Preliminary drawings and sketches by an architect, such as site plans and elevations.
Term
setback
Definition
The distance a building must be set back from the street; usually determined by local building code.
Term
Subdivided Lands Law
Definition
State law protecting purchasers of property in new subdivisions from fraud, misrepresentation, or deceit in the marketing of subdivided property.
Term
subdivision
Definition
The division of land into five or more lots for the purpose of sale, lease, or financing.
Term
Subdivision Map Act
Definition
The law that authorizes a city or county to control the orderly and proper development of the community.
Term
tentative tract map
Definition
Map of the proposed subdivision that is submitted to a planning commission for approval or disapproval.
Term
variance
Definition
Exception granted to existing zoning regulations for special reasons.
Term
wainscoting
Definition
The bottom portion of a wall that is covered with wood siding; the top part is treated with another material.
Term
water table
Definition
The natural level at which water will be found, either above or below the surface of the ground.
Term
water-pressure test
Definition
Water pressure can be tested by turning on all faucets and flushing all toilets at the same time.
Term
wetlands
Definition
Areas where water covers the soil, or is present either at or near the surface of the soil all year or for varying periods of time during the year, including during the growing season.
Term
zoning
Definition
The regulation of structures and uses of property within selected districts.
Term
Americans with Disabilities Act
Definition
Federal law passed in 1990 that prohibits discrimination against individuals with disabilities.
Term
blockbusting
Definition
The illegal practice of telling people that property values in a neighborhood will decline because minorities purchase the homes.
Term
brokerage
Definition
An intermediary who negotiates the transaction for payment. A negotiator and agent of the principal, expecting a commission at the end of the negotiation.
Term
California Fair Employment and Housing Act
Definition
State law that prohibits discrimination in the sale, rental or financing of practically all types of housing.
Term
CAN-SPAM laws
Definition
Federal and state law regulating commercial e-mail messages.
Term
cold calling
Definition
Making unsolicited calls to unknown people to get new business.
Term
commercial e-mail message
Definition
Electronic mail message whose primary purpose is the commercial advertisement or promotion of a commercial product or service.
Term
commingle
Definition
The illegal practice of depositing client’s funds in a broker’s personal or general business account.602California Real Estate Principles.
Term
commission
Definition
A fee for services rendered usually based on a certain percentage of the sales price of a property.
Term
company dollar
Definition
The amount a broker has left after all commissions have been paid.
Term
corporation
Definition
A legal entity whose rights in business are similar to that of an individual.
Term
DBA
Definition
Doing business as, another name for a fictitious business or trade name.
Term
desk cost
Definition
Profitability measure calculated by dividing the total operating expenses of the firm by the number of licensed sales associates.
Term
do-not-call
Definition
Federal and state regulations regarding unsolicited phone calls.
Term
employee
Definition
Someone who is under the control and direction of a broker.
Term
ethics
Definition
A set of principles or values by which an individual guides his or her own behavior and judges that of others.
Term
fictitious business name
Definition
Business name that does not include the last name of the owner.
Term
Housing Financial Discrimination Act of 1977.
Definition
(1) A law designed primarily to eliminate discrimination in leading practices based upon the character of the neighborhood in which real property in located. (2) Also known as "Holden Act" (See redlining).
Term
independent contractor
Definition
A person who is hired to do work for another person but who is not an employee of that person.
Term
joint and several liability
Definition
A legal term used in reference to a debt or a judgment for negligence,in which each debtor or each judgment defendant is responsible for theentire amount of the debt or judgment.
Term
Jones v. Mayer
Definition
A case prohibiting racial discrimination by upholding the 1866 Civil Rights Act and the 13th Amendment to the U.S. Constitution.
Term
limited liability company
Definition
An alternative business entity that has characteristics of both corporations and limited partnerships.
Term
partnership
Definition
A form of business in which two or more persons join their money and skills in conducting the business.
Term
prospecting
Definition
The process of identifying potential customers.
Term
redlining
Definition
The illegal use of a property’s location to deny financing.
Term
S corporation
Definition
A corporation that operates like a corporation but is treated like a partnership for tax purposes.
Term
sole proprietorship
Definition
A business that is owned and operated by one person.
Term
steering
Definition
The illegal practice of only showing clients property in certain areas.
Term
trust funds
Definition
Money received by a broker to be used in a real estate transaction.
Term
Unruh Civil Rights Act
Definition
State law that prohibits discrimination by businesses.
Term
1031 Exchange
Definition
Tax-deferred exchange used to defer tax liability.
Term
agricultural property
Definition
Property zoned for use in farming.
Term
appreciation
Definition
An increase in property value with the passage of time.
Term
boot
Definition
Extra cash or non like-kind property put into an exchange.
Term
brownfield
Definition
An abandoned commercial or industrial site or under-utilized neighborhood where redevelopment is complicated by actual or perceived contamination.
Term
building manager
Definition
Person employed by a property manager or directly by an owner, and who usually manages a single, large building or office complex.
Term
bulk sales
Definition
The sale of a substantial part of the inventory of a business.
Term
business opportunity
Definition
Any type of business that is for lease or sale.
Term
clearance of tax liability
Definition
Certificate signed by the county tax collector in mobile home sales.
Term
depreciation
Definition
Tax advantage of ownership of income property.
Term
equity buildup
Definition
The gradual increase of a borrower’s equity in a property caused by amortization of loan principal.
Term
estate tax
Definition
Federal tax on the “taxable estate” of a decedent’s assets at the time of death.
Term
financing statement
Definition
The document used to record the debt; it is not actual evidence of the debt.
Term
goodwill
Definition
The expectation of the continued patronage of an existing business.
Term
hedge against inflation
Definition
Real property appreciation keeps pace or exceeds inflation rates.
Term
houseboat
Definition
A barge that is designed and equipped for use as a dwelling.
Term
infill development
Definition
The development of vacant parcels in existing urban and suburban areas.
Term
installment sale
Definition
Sale in which payments are made, by the buyer, to the seller, over a period of more than one year.
Term
leverage
Definition
The use of borrowed capital to buy real estate.
Term
management contract
Definition
Contract between the owner and the property manager.
Term
mansionization
Definition
Building larger, more extravagant homes older neighborhoods with small to medium-sized homes.
Term
manufactured home
Definition
Home built in a factory after June 15, 1976 that conforms to the federal Manufactured Home Construction and Safety Standards.
Term
mobile home
Definition
A factory-built home manufactured prior to June 15, 1976, constructed on a chassis and wheels.
Term
mobile home park
Definition
Any area or tract of land where two or more lots are rented to accommodate manufactured homes or mobile homes used for human habitation.
Term
probate sale
Definition
A court-approved sale of the property of a person who is deceased.522 California Real Estate Principles.
Term
resident manager
Definition
Person employed to manage an apartment building.
Term
sales tax
Definition
Tax collected as a percentage of the retail sales of a product, by a retailer.
Term
security agreement
Definition
The document commonly used to secure a loan on personal property.
Term
seller’s permit
Definition
Permit used to collect sales tax from customers.
Term
straight-line method
Definition
Depreciation method where the same amount is deducted every year over the depreciable life of a property.
Term
timeshare
Definition
Common ownership of a single piece of property by an association with each owner having the exclusive right to occupy a unit for a specified period each year.
Term
turnkey project
Definition
Projects that are ready for occupancy.
Term
unearned increment
Definition
The increase in value of a mortgaged property generally accrues to the benefit of the trustor.
Term
Uniform Commercial Code
Definition
Code regulating security interests in personal property of businesses.
Term
urban sprawl
Definition
The unplanned growth of an urban area into adjoining areas.
Term
45 hours
Definition
Hours needed for subsequent renewal of broker or salesperson license.
Term
accusation
Definition
When a complaint is filed that appears to be of a serious nature and that a violation of law has occurred.
Term
Advocacy Program
Definition
CalBRE enforcement program that handles simple disputes.
Term
branch offices
Definition
More than one place of business.
Term
conversion
Definition
Misappropriating and using principal’s funds.
Term
false promise
Definition
A false statement about what someone is going to do in the future.
Term
license law
Definition
Another term for the Real Estate Law.
Term
misrepresentation
Definition
A false statement of fact.
Term
obligors
Definition
A person listed by Child Support Services as delinquent in paying child support.
Term
panic peddling
Definition
An illegal practice of inducing people in a neighborhood to sell their homes, by making them believe that members of a minority group are likely to buy property in and around their residential area.
Term
real estate broker
Definition
Someone who holds a broker license issued by the Bureau of Real Estate.
Term
Real Estate Commissioner
Definition
Person appointed by the governor to enforce the provisions of the Real Estate Law and the Subdivided Lands Law.
Term
Real Estate Law
Definition
Another name for the Business and Professions Code, Part 1 entitled Licensing of Persons.
Term
Real Estate Recovery Fund
Definition
A separate account funded through collection of a fixed amount from each license fee.
Term
real estate salesperson
Definition
Someone with real estate license who must be employed by a real estate broker in order to perform any of the activities that require a license.
Term
REALTOR®
Definition
Designation used by active member of NAR.
Term
restricted license
Definition
Type of probationary license issued when a license has been suspended, revoked, or denied after a hearing.
Term
secret profit
Definition
Undisclosed profit made by a broker at his or her principal’s expense.
Term
two-year grace period
Definition
The period of time after a license that renewal is allowed, as long as all real estate activity has ceased during that time and a late fee is paid at the time of renewal.
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